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Updated May 28, 2024
7-min read
Expert Approved
Expert Approved
This article has been reviewed by a
Certified Financial Planner™ for accuracy.
Written byTJ Porter
Expertise:Credit, credit cards, investments
TJ Porter is a Boston-based freelance writer specializing in credit, credit cards, and bank accounts. He graduated with a degree in business from Northeastern University.
Learn more about TJ Porter
Reviewed byMike Menninger, CFP®
Reviewed byMike Menninger, CFP®
Expertise:Comprehensive financial planning, tax planning, investment planning, retirement planning, estate planning
Michael Menninger, CFP®, and the founder and president of Menninger & Associates Financial Planning. He provides his clients with financial products and services, always with his client's individual needs foremost in his mind.
Learn more about Mike Menninger, CFP®
Student loans are one of the largest sources of debt in the United States. More than $1.7 trillion of student loan debt exists in the United States, with the average borrower owing nearly $30,000 to their lenders.
Student loan debt is also a “sticky” form of debt. While you can escape other debt through bankruptcy, it’s almost impossible to get out of your student debt without paying it in full.
Student loans can delay borrowers’ ability to achieve life goals such as getting married, having children, buying a home, pursuing further education, or finding an excellent job in their preferred field. Here’s a closer look at how student debt can affect your life—and what you can do to limit that impact.
Ways student loan debt can affect your life
Students who graduate with debt will feel the effects of their debt for years after they graduate. Beyond the stress and anxiety that large amounts of debt can cause, student loans can force people to make hard choices and delay important life events.
Here are some ways in which student loan debt can have an impact on your life:
- May rush into a job to meet repayment requirements
- Lowering your net worth
- Delay borrower’s ability to buy a home
- Delay a borrower’s ability to start a family
- May impact your marriage
- Potential for poor credit if payments missed
- May cause people to skip out on attending college
May rush into a job to meet repayment requirements
If you have student debt, you must pay your loan bill every month. Depending on how much you borrowed, the bill can be considerable. This could lead many students to take on a job that pays more, or simply any job they can find, rather than waiting and finding their dream job.
According to a study published by the American Student Association, nearly 50% of graduates agree that their debts hampered their ability to further their careers.
Someone without student debt could be more choosy and take the time to find a job they truly enjoy. They’d also have the freedom to take risks in pursuit of higher salaries.
Lowering your net worth
Few students graduate from college with a huge net worth, but students who avoid student loans will at least graduate with a net worth near $0. If you graduate with student loans, it usually means having a negative net worth.
This isn’t something that will have an immediate, negative effect on you, but it can have many minor impacts that you’ll feel over time.
Having low net worth may mean you have trouble making large purchases because you won’t have the funds. It’s possible that it can make it challenging to qualify for loans.
While a college education still tends to increase overall career earnings by a significant amount (about $1 million more than someone with no college education), it can take a long time for graduates to come out ahead compared to people who take on no debt.
Delays borrower’s ability to buy a home
One of the most common ways to buy a home is to borrow money with a mortgage. If you have student loan debt, you already have one large debt that you have to repay. It can be challenging for someone to handle both a mortgage payment and a student loan payment. Having the debt can also make it hard to qualify for a mortgage in the first place.
A study by the Federal Reserve shows the impact of student loans on homeownership rates. A 10% increase in student loan debt correlates with a 1.5% decrease in homeownership rates.
Homeownership is one of the largest builders of wealth in the United States, so delaying the purchase of a house can have a major effect on a student borrower’s ability to increase their wealth.
>> Read More: Buying a house with student loan debt
Delays a borrower’s ability to start a family
There’s no question that having children is expensive. On average, it costs about $233,610 to raise a child from birth to 18 years old. That comes to almost $13,000 per year per child.
If your budget is already stretched by student loan payments, adding another $1,000+ per month obligation is likely to break your budget completely. Children can also add complications and stress to a life already full of stress from dealing with debt.
This could lead many to delay starting a family until they’ve paid off their loans.
>> Read More: What happens to student loan debt when you die?
Can affect your marriage
Getting married can affect your student loans, for example, by changing your income for income-driven repayment plans. However, your debt could also harm your marriage.
According to a study by SunTrust Bank, financial stress is one of the leading causes of divorce in the United States.
This could be one reason many millennials are getting married later or passing on marriage altogether.
Additional resources:
- Should you marry someone with six figures of student loan debt?
- What happens to student loan debt during a divorce?
Poor credit if you struggle with repayment
Your credit score can have a considerable impact on your financial life. If you pay your student loan bills on time, it can help you build good credit. Missing payments, however, can damage your credit.
Because many student borrowers have trouble making payments, the average credit score for someone with student loans is lower than the national average. The average person with student loans has a credit score of 656, but the average for the entire United States is 711.
This is a massive difference, and it can take years for a student borrower to rebuild their credit after missed or late payments.
Cause prospective students to avoid college out of fear of taking on debt
The prospect of taking on tens of thousands of dollars of debt can be daunting, so many students may decide to avoid college entirely to avoid taking out college loans.
If college debt were less of an issue, more people might be willing to pursue higher education, increasing their lifetime income and building a more educated workforce.
How you can limit the impact of student loan debt on your life
If you have student loans or plan to borrow money to pay for college, there are several; ways to limit the impact of student debt on your life.
First, if you haven’t started school or are still in school, take steps to reduce the cost of your education. This may mean applying for more scholarships, selecting a less expensive program, or working during the school years or summers to help pay tuition.
If you already have student debt, one of the best things to do is create a budget. Planning and tracking your spending can make you more mindful about where you spend your money. It can also potentially help you identify ways to put more money toward paying off your debt.
At the very least, it will leave you in a good position to make every monthly payment because debt payments are built into your monthly plan. Signing up for automatic payments can make this even easier.
Also, take the time to look at the different student loan repayment options available to you. You might be able to save money with an income-driven repayment plan or start working toward loan forgiveness, both of which can save you huge amounts of money in the long run.
If you’re struggling, you don’t have to struggle alone. Don’t be afraid to reach out for help. Talk to your loan servicer and see if it can help you. Many will have programs for people struggling to make payments. You may also be able to get support from friends and family.
